Quality is the key for New Hampshire

Wednesday

Dec 12, 2012 at 3:15 AM

It takes more than just money to lure business

Every election cycle candidates for state office trumpet plans to lure businesses to the Granite State. We need to do more to pique business leaders’ interest, and financial incentives such as tax breaks may be just the ticket, many candidates say. But a series of articles this week by The New York Times exploring the system by which states offer a total of $80 billion annually in incentives to businesses shows that company-courting gimmicks may leave states worse off in the long-run.

According to The Times, New Hampshire is one of the lowest giving states, spending $39 million per year on incentives such as tax breaks and grants, loans or loan guarantees for businesses — that works out to about $30 per capita. Meanwhile, Texas ranks as the top giver, offering $19 billion per year to entice companies (about $759 per capita) and officials often tout its economic acumen on the job-creation front. The pitfall of these breaks is that many companies close (leaving states on the hook for hefty loans) or use state incentives as leverage, simply packing up to go to another location if they don’t get what they want, The Times reports. Many incentives, such as tax abatements, come at the expense of local public school systems that rely on tax payments, and often new jobs created from the incentives pay below a living wage — contributing to persistent poverty among workers.

Granite State officials often point to the state’s lack of income or sales taxes as the “New Hampshire Advantage,” the term coined to describe the state’s competitive edge in drawing businesses. But what can get lost is the unique blend of other factors that convince business leaders to settle in New Hampshire; the tax structure benefits the state in concert with a skilled workforce and good quality of life. New Hampshire boasts good schools, low crime rates, plenty of open space and outdoor recreation opportunities and a relatively healthy population that enjoys good access to health care.

The Times’ report makes it clear that financial incentives may be all it takes to lure some companies in, but getting them to stay takes something else. There will likely always be offers of bigger perks just beyond the state’s borders. But by continually striving to make New Hampshire a place where business leaders can both make money and enjoy living and raising families, the state can position itself to maintain a stable, steadily-growing economy.

— Keene Sentinel

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